The truth is that if you invest for long enough, you're going to end up with some losing stocks. But long term Sinopec Shanghai Petrochemical Company Limited (HKG:338) shareholders have had a particularly rough ride in the last three year. Regrettably, they have had to cope with a 63% drop in the share price over that period. Even worse, it's down 12% in about a month, which isn't fun at all. But this could be related to poor market conditions -- stocks are down 8.5% in the same time.
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Sinopec Shanghai Petrochemical saw its EPS decline at a compound rate of 53% per year, over the last three years. In comparison the 28% compound annual share price decline isn't as bad as the EPS drop-off. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It might be well worthwhile taking a look at our free report on Sinopec Shanghai Petrochemical's earnings, revenue and cash flow.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Sinopec Shanghai Petrochemical's TSR for the last 3 years was -54%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
Sinopec Shanghai Petrochemical shareholders gained a total return of 2.0% during the year. But that return falls short of the market. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 7% endured over half a decade. It could well be that the business is stabilizing. It's always interesting to track share price performance over the longer term. But to understand Sinopec Shanghai Petrochemical better, we need to consider many other factors. For instance, we've identified 3 warning signs for Sinopec Shanghai Petrochemical that you should be aware of.
Of course Sinopec Shanghai Petrochemical may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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